Consumer Reports on travel.

High-flying Debate

Winners And Losers In The Airline Deregulation Game

On the question of airline deregulation, the airline industry's self-appointed gurus give no middle ground: Proponents claim that consumers have saved billions of dollars because of lower air fares, while opponents retort that deregulation has come close to ruining the industry. Actually, of course, there's an element of truth on both sides.

I recently taped a TV show about deregulation with some people who represented other deregulated industries-telephones and cable TV-and we started to make lists of who were winners and who were losers in the process. After some additional thought, here's my list of winners and losers in the airline business:

Winners: Leisure travelers who are able to comply with the 14-day advance purchase and Saturday-night-stay requirements that the cheapest coach excursion fares require on most routes. In dollars adjusted for inflation, those happy travelers pay a good bit less than they paid in the regulated days.

Losers: Leisure travelers who can't abide by those standard restrictions. Unless they happen to be flying where Southwest or one of its clones flies, they've been severely gouged on air fares. I suspect that many other such travelers simply don't fly at all-they either stay at home or get where they're going some other way.

Winners: Big businesses and government agencies that have been able to wangle sizable corporate discounts-a practice that was not allowed during the days of regulation.

Losers: Small businesses and individual professionals who must either stay away from home over a weekend whenever they travel on business or pay outrageous rates for "unrestricted" tickets. Again, only those lucky enough to be flying where a low-fare line flies can avoid being gouged.

Winners: Travelers who don't mind being stuffed into ultra-crowded seats and receiving assembly-line service, if that's what it takes to get the lowest possible fares. Under deregulation, the coach airline seat on a major airline has become a cheap commodity.

Losers: Travelers who would be willing to trade up a bit-pay a little more to get a little more room and better service. As things stand, that first trade-up step entails an enormous extra cost: To get a comfortable seat, you must pay up to eight times the amount you pay for a seat in the cattle car.

Winners: Finaglers who enjoy the challenge of figuring out ways to beat a complicated system.

Losers: Prosaic buyers-and ideologues-who believe in one price for everybody.

Winners: Financial wheeler-dealers who loaded the airlines with debt in order to line their own pockets.

Winners: Employees at Boeing, General Electric, and Pratt & Whitney-and their subcontractors-who build the planes and engines the airlines have been buying at a fairly steady clip despite their horrible financial shape.

Losers: Airline employees, who have been forced to accept all sorts of reductions in pay and benefits to help keep their lines afloat. Many airline employees now earn about the same pay as they'd get working a fast-food counter or washing cars.